US casino group, Caesars Entertainment has struck a £2.9 billion deal with British bookmaking giant William Hill which will see it take over the 56-year-old gambling company, according to Bloomberg.
Having completed the due diligence on the deal, details were revealed that the Nevada-based operator would pay 272 pence per share which would see it assume full control in an industry that is estimated to reach a $92.9 billion market value by 2023.
Caesar’s Entertainment Chief Executive, Tom Reeg was bullish on the deal, highlighting the potential for the company to combine its land-based assets with online gambling and sports betting to effectively create, as far as the US market is concerned, would be considered a supergroup.
Reeg said:
“The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect.”
It is estimated that the augmented deal that Caesers now have in the marketplace could generate up to $700 million during the 2021 financial year.
Prior to this deal, William Hill already had a partnership with Caesars that included a 20 percent joint venture with William Hill’s US-based arm, which entitled the William Hill brand to appear in their casinos.
Effectively, the latest developments have handed over full control of this venture to Caesers who will now have the ultimate say when it comes to how this will move forward.
Strong Opposition Fought Off
It wasn’t just Caesers who were bidding to take over William Hill, with American global investment management firm, Apollo also understood to have submitted an acquisition proposal, however, Caesars held the upper hand when it came to negotiations.
Recommendations put to the William Hill board advised in Caesers’ suggesting that they had considerable leverage to terminate certain stipulations of the whole agreement struck between the two companies, such as mobile market access rights for future ventures that could be launched by the William Hill shareholders, off the back of proceeds from the deal.
Following the successful bid from Caesers, it announced that its focus would be mainly on William Hill’s American asset and that it would be seeking suitable partners for its UK based business divisions. This has caused speculation of a firesale from the company who could look to make a substantial profit from the remaining arms of the William Hill enterprise, however, such moves will no doubt be seen as folly.
It is more likely that the last remaining betting shops that still operate in the UK could well be sold off, having been deemed as unprofitable in 2018, and potential joint ventures sought for its other assets in markets where this may make sense.
Creation Of Another Industry Whale
With the likes of GVC, Flutter/Stars and 888 Holdings already dominating the online gambling market, with many different brands under their umbrella, it seems that another super conglomerate could be created should William Hill be acquired by Caesers.
This appears to have become standard practice in the gambling industry, especially over the last decade. It has seen GVC buy mega-brands bwin and Sportingbet as well as Coral and Ladbrokes (who had previously merged), taking their portfolio to well over 25 companies.
What this could potentially do for Caesers and by extension, their owners – Eldorado Resorts is gather an idea for whether further deals would work in the future, using William Hill as somewhat of a litmus test for the American market. However, there are very few big brands remaining that are independently owned and focus could well shift towards smaller and more agile companies in the space.
There is a considerable amount of attention on the US gambling industry, with eyes closely following what is happening in relation to new laws being passed in the remaining states which are still to allow online gambling. While this may never happen for all of them, if the majority follow suit, the potential for the gambling industry in the US market would be substantial.
